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Ali Baba

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Submitted By annancyjr
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Jon Haase Nov 1, 2009 China Logistics & Supply Chain Management CIMBA Professor Ning Shi

Alibaba.com Case Write: A Consideration of a the Virtual Service Value Chain Abstract: The purely virtual and service providing nature of Alibaba.com’s business model requires they modify the traditional value chain model to reflect the customer base and service provided, and that there is no physical product moving through their logistics. Because of this, marketing & sales and customer service must be moved in the model to reflect their presence from before the service can begin through to the end of the transaction. Also, the concepts of inputs, operations, and outputs, need to reflect the service and its virtual nature. As Alibaba.com continues to grow with the Chinese economy, especially the increased internet usage of SMEs, and they monetize their customer base, Alaibab.com will continue its quest to becoming a world leading e-commerce business.

What has made the Chinese e-commerce giant Alibaba.com the world leader in creating and serving business-to-business relationships has been their unique ability to link suppliers and buyers around the world. Coinciding with their value proposition and business ideas has been their timing in the history of the economic growth of China that has served to fuel their incredible growth. Economic Considerations The timing for the emergence of Alibaba has perfectly coincided with the rapid growth in several important economic factors. • China’s Internet acceptance and usage by it’s immense population: From 2002 to 2007, China’s Internet penetration rate had risen from 3.6% to 12.3% crossing an important threshold to catch up to countries like the US, Japan, and South Korea where penetration is over 65%. • Expected surge in e-commerce amongst SMEs, which had risen from 4.5% in 2002 to 28% in 2006, and is estimated to climb to 82% by

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